How to get rich investing in health

This is a POLITICO case study, a look at what works — and what doesn’t  — in the fight against HIV. The article is part of Telescope: The New AIDS Epidemic, a deep-dive investigation into the modern face of a disease that transformed the world.

THE BIG PROBLEM

HIV isn’t over — but the epidemic is no longer the cause celebre it used to be. That’s drying up cash flows and sapping the sense of urgency to take basic steps to fight its spread.

THE BIG IDEA

A social impact bond could provide new donors with the reassurance they need to be confident their money is being well spent.

The Elton John AIDS Foundation launched a social impact bond to implement a program to expand HIV testing in several London neighborhoods hit hard by HIV. By offering investors and health care providers alike the chance to earn extra money by doing good, the singer’s charity aims to entice the English government to make an even bigger investment in these services.

HOW IT WORKS

Social impact bonds are a way for rich players — governments or deep-pocketed charities — to pay for results, rather than simply throw money at a problem and hope it works. Instead of just providing a grant, a funder like the Elton John AIDS Foundation backs “bonds” that investors can buy with the guarantee that they’ll be paid back, with interest, each time the program they’re funding succeeds in a specific way.

In essence, the investors are covering the risk inherent in any big effort. If everything works, everybody wins. The funder has ensured its money is well spent, and the investors get a return on their investment. If things go wrong, the investors are out of luck, but the funder has held on to its money, and the process can begin again.

In this case, the Elton John AIDS Foundation teamed up with the U.K.’s National Lottery Community Fund and the Borough of Lambeth in London to back £1 million in bonds to help hospitals, doctors offices and social workers improve their HIV testing and outreach programs. Investors were repaid as the targeted number of people were diagnosed with HIV or reconnected to treatment after dropping out of the system.

The goal: 200 of these so-called “payment outcomes” — HIV diagnoses and reconnected patients — would pay back the investors, with interest.

The timeline: October 2018 to December 2021.

The location: The London neighborhoods of Southwark, Lambeth and Lewisham have some of England’s highest rates of HIV. They’re home to an estimated 1,000 people who have HIV but don’t know it.

WHY IT MATTERS

England is one of the few places with a serious chance to meet the global goal of eliminating HIV by 2030. But to do that, it will have it identify the estimated 5,900 people living in the country with undiagnosed HIV. The trouble is that there isn’t enough money or momentum to carry out the tests that would be needed to accomplish that.

The Elton John AIDS Foundation’s program was intended as a proof of concept. The charity decided to play the role of the government, putting up the cash to put in place so-called opt-out testing programs, in which people are automatically tested for HIV when the opportunity presents itself — when they show in the emergency room, for example, or when they’re getting another blood test. 

Rather than simply donating the money, the foundation issued social impact bonds to cover the cost, raising £1 million it would pay back only as the results rolled in.

The charity is hoping social impact bonds could make a big impact, if they are adopted by even bigger funders like governments. By relying on investors to cover the risk of things going wrong, a government or charity can ensure taxpayers or donors that their money will be well spent.

The foundation is also trying to deal with the fact that the fight against HIV in England is, to some extent, a victim of its own success. Millions of people who live with the virus in sub-Saharan Africa have limited access to treatment, and rates of HIV are surging in Eastern Europe — meaning those areas are more logical targets for big donations. The U.K., on the other hand, is one of the world’s richest countries. By offering investors a chance to issue a loan with interest, rather than a traditional grant, the foundation hoped to lure new players towards England’s final push against the virus.

IN THEIR VOICES 

Anne Aslett, CEO of the Elton John AIDS Foundation, on how a bond could attract a new set of bankrollers to the fight against HIV in England:

HOW THEY DID IT

To make the project work, the Elton John AIDS Foundation had to recruit three categories of participants: funders (also called “outcome payers”), providers and investors.

The funders: Known as “outcome payers,” these are the groups who agree to pay back investors as the effort proves successful. The Elton John AIDS Foundation is covering the bulk of these payments, the National Lottery Community Fund pays for another 30 percent and the Borough of Lambeth also makes a £50 thousand annual contribution.

The providers: Hospitals, doctors organizations and social service organizations in the London boroughs of Lewisham, Lambeth and Southwark agreed to begin testing for HIV by default in the emergency department and when requesting other blood tests (unless people explicitly turn it down). They also agreed to leverage their community connections to get people back on treatment, another measure of success under the program.

IN THEIR VOICES  

Grace Bottoni, GP at OneHealth Lewisham, on one patient who thought they didn’t need an HIV test, but agreed to one even though they were in a hurry:

The investors: Because it was seeking to prove that the concept worked, the Elton John AIDS Foundation wore two hats. In addition to serving as a funder, it also played the role of an investor. With three other investors, it provided a combined £1 million to help kick things off.

The other investors were Viiv (one of just a few pharmaceutical companies making HIV medicines), Comic Relief (a charity working to alleviate poverty) and The Big Issue Invest. A social investment offshoot of a charity usually focused on homelessness, The Big Issue Invest pitched in around £200,000, and charged 2 percent interest, according to Daniel Wilson-Dodd, who was in charge of the charity’s investments at the time.

While the cash was going to a good cause, the investors fully expected to get that money back. Each HIV diagnosis and patient back on track are worth a set amount of money (The Elton John AIDS Foundation declined to disclose the exact sum.) 

IN THEIR VOICES 

Daniel Wilson-Dodd, member of the Elton John AIDS Foundation Zero HIV project board, formerly of the Big Issue Invest, on how investors’ drive to be paid back can push the project to succeed:

HOW IT WENT

The program is supposed to run until the end of 2021, but the preliminary results look good — despite the disruption caused by the coronavirus crisis. 

When coronavirus lockdowns kicked in a year ago — and people started avoiding medical facilities — The Elton John AIDS Foundation and their investors figured the experiment was pretty much over. Confinement is bad for community outreach, and pressure on labs meant all but the most urgent blood tests came to a halt. The last few months have delivered strikingly low payment outcomes.

But if the first reopening was any sign, they’ll spike way up again once life starts to return to normal. All the media attention on infection control made patients more receptive, according to Grace Bottoni, a Lewisham GP who’s working to convince other doctors to sign onto the project.  Physicians could use the pandemic to make the case for ensuring patients’ immune systems were in tip-top shape.

IN THEIR VOICES  

Grace Bottoni on how COVID-19 changed the HIV calculus for some patients:

BY THE NUMBERS To date, 146 people have been newly diagnosed through the SIB, and another 139 have re-engaged with treatment. The project achieved its benchmark of 200 payment outcomes less than two years into its three-year span, and some providers are on track to start bringing in extra cash.

The foundation considers that a success. Getting a person with HIV into treatment ultimately saves the system £200,000, because they won’t have to be hospitalized for serious illness and can’t pass the virus on to others, according to Elton John AIDS Foundation’s calculations.

IN THEIR VOICES  

Anne Aslett on finding an octogenarian who’d fallen through the cracks:

THE TAKEAWAY

Success? So far, so good. But the truth is it’s unclear just how much difference this initiative has made — because the data for HIV testing and diagnosis rates before the project started don’t really exist. That said, a single point of comparison suggests a sea change. In the year prior to the project, Bottoni’s network of 35 GP practices in Lewisham diagnosed 3 cases, but during the first year of participation, they found nine. Their HIV testing in primary care was up 70 percent.

A big caveat: Social impact bonds are a novel approach to fundraising. But it’s hard to say whether The Elton John AIDS Foundation itself spent less money than it would have paying for this project alone.

— Startup cash: Because the charity had to convince others to risk their own funds, they had to do considerable research first, including launching a smaller pilot study in Leeds. 

— Legal costs:  The foundation got free legal help to set up all these complex arrangements. Without that, it may not have been financially feasible.

Keep it simple: The other key to a successful social impact bond is having straightforward, measurable outcomes, participants agreed. Test results and patients reconnected to care: They’re yes-or-no data points. Projects that may have more long-term or complicated goals may not be conducive to a social impact bond. 

IN THEIR VOICES  

Daniel Wilson-Dodd on why simplicity is key for a successful social impact bond:

Slow start: In research conducted ahead of the project, health care providers cited a lack of funding as the main reason for inconsistent HIV testing. Yet when that money was offered to them through social impact bonds, they were wary of taking it. The idea of signing on to this Wall Street-inspired scheme seemed like too much to deal with, especially when they were already trying to meet their existing targets with an austerity-ravaged budget. Organizers said if they use this approach again, they’ll build in more of a runway to recruit providers and sign contracts. 

IN THEIR VOICES  

Anne Aslett on why some providers were skeptical about signing onto the social impact bond:

THE BIG QUESTION

The Elton John AIDS Foundation was able to put a price tag on helping people with HIV. But political momentum is priceless — will their initiative die on the vine, or can the foundation convince the government that this approach makes interventions like these a good investment for the British taxpayer? The real test will be whether the National Health Service starts picking up the tab when the project ends on December 31 and implements this policy around England. 

IN THEIR VOICES  

Barbara Storch, chair of the Elton John AIDS Foundation Zero HIV project board, on hopes for the future:

Audio production by Cristina Gonzalez.